Asset Management Consolidation Accelerates as Firms Scale or Specialise

Asset management consolidation is accelerating as falling fees, rising operating costs and growing demand for private markets force firms to choose between building greater scale or developing highly specialised investment capabilities, according to consultancy Alpha FMC.

Institutional management fees have declined by around 3% annually, while passive strategies now account for approximately 39% of investments among the world's largest asset managers, senior partner Chris Kroeger said.

Pressure on mid-sized firms is helping drive mergers, highlighted by Nuveen's planned acquisition of Schroders, which would create a group managing about USD2.5tr.

Larger platforms can benefit from technology investment, distribution scale and private-market origination, while specialist boutiques may compete through distinctive investment expertise.

For Asian institutional investors, consolidation can also create risks, including investment-team departures, product rationalisation and disruption to reporting or local client coverage.

Investors therefore need to assess whether mergers alter portfolio management capabilities or service standards.